When peace does not mean prosperity

By Felix Salmon

October 12, 2012

announcement was set in stone a long time ago, of course, but I love the way in which it comes just two days after EADS and BAE -- two European arms-dealing behemoths -- announced that their greatly-desired merger had been killed by European political infighting. "
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The timing of the Nobel Peace Prize announcement was set in stone a long time ago, of course, but I love the way in which it comes just two days after EADS and BAE — two European arms-dealing behemoths — announced that their greatly-desired merger had been killed by European political infighting. Here’s the Nobel announcement:

The EU is currently undergoing grave economic difficulties and considerable social unrest. The Norwegian Nobel Committee wishes to focus on what it sees as the EU’s most important result: the successful struggle for peace and reconciliation and for democracy and human rights. The stabilizing part played by the EU has helped to transform most of Europe from a continent of war to a continent of peace.

And here’s EADS:

Notwithstanding a great deal of constructive and professional engagement with the respective governments over recent weeks, it has become clear that the interests of the parties’ government stakeholders cannot be adequately reconciled with each other or with the objectives that BAE Systems and EADS established for the merger.

The stock market, for what it’s worth, quite liked the failure of the deal: mega-mergers, after all, rarely work. Maybe they should send flowers to Angela Merkel, who bears most of the credit/blame. Meanwhile, as a proud EU citizen, I’ve been walking on air all day: I can now add the Nobel Prize to the Time Person of the Year award in the list of my personal achievements. Jose Manuel Barroso says so himself!

This prize belongs in much the same category as Barack Obama’s, or Paul Krugman’s: it’s designed to push a certain vision of how the world should look in the future, as much or more than it is designed to recognize some achievement which happened in the past. But there’s a problem here: the things which worked in the past won’t work in the future. The Nobel committee surely has a vision of prosperity and unity — as Dylan Matthews explains, the two have gone hand-in-hand for the past 60 years. But where they used to work together, they’re now working against each other: as Gary Cohn says, there’s a good chance that the EU, or at the very least the eurozone, is going to break up precisely in order to generate the kind of prosperity which no longer seems possible anywhere south of Milan.

All of which is to say that fractiousness, these days, seems to be more remunerative than unity. We’re becoming a go-it-alone, winner-takes-all world, where opposition beats cooperation — and that, in turn, bodes ill for peace and for federalism wherever it’s found. There’s no chance of outright war within the EU: that particular achievement is nailed down, and has been for decades now. But riots and unrest and national-independence movements are on the rise, in large part because the European project of ever-greater integration and unity has stopped producing wealth and started destroying it instead.

The dot-com boom of the late 1990s was financed in large part by the peace dividend of the early 1990s: money which used to get poured into the Cold War could be spent much more productively elsewhere. Indeed, for most of the past 50 years, western Europe has been steadily moving money out of swords and into ploughshares and the welfare state. But that trend has been taken about as far as it can go, at least in Europe. And so while peace and prosperity have historically been aligned, as the consultants might have it, that alignment is getting thrown out of whack right now.

Which is why I think the Nobel committee decided to give the EU its gong this year. It’s their way of saying that the European project is a worthy and noble one regardless of whether it creates wealth and prosperity. In reality, however, if a European economy falls into a deep recession where the only visible way out is exit from the euro, then that economy will inevitably exit the euro. Politics might sometimes trump economics, but economics nearly always trumps ethics. Almost everybody likes the EU in theory. But unless it works for them in practice, it will certainly fall apart.